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Federal policies

The US federal government passed energy acts in 2005, 2007 and 2008, each aiming to increase energy security and strengthen the economy by increasing energy efficiency and expand renewables. It has also set energy efficiency standards for about 20 kinds of products, such as freezers and air conditioners.

The February 2009 American Recovery and Reinvestment Act (ARRA) included $70 billion for energy programs. Funding streams included:

• $11 billion for ‘smart grid’ investments.
• Nearly $9 billion for advanced energy technology research, carbon capture-and-storage technologies
• Over $6 billion in grants for state and local governments for energy efficiency.
• $4.5 billion to modernize federal buildings.
• $5 billion for weatherization programs for low-income households, senior citizens, single parents and disabled people.
• $4.5 billion for improving the electricity grid (to make it more efficient and better able to deal with intermittent sources of electricity such as wind and solar).
• $2.4 billion for CCS demonstration.
• $2.4 billion for electric vehicles.
• $500 million to help workers train for ‘green jobs’.

ARRA also included $20 billion in clean-energy tax incentives for residential efficiency measures, wind and solar power, and efficient cars.

This sounds quite impressive, but ARRA was in total a $787 billion stimulus package, so the clean energy and energy efficiency money was less than 10% of the total. For comparison, South Korea spent about 80% of its stimulus on clean energy and energy efficiency.

However, the Obama Administration is at least showing efficiency in allocating the money. In July 2009, a public-private project was awarded $1 billion from ARRA funds to construct a CCS coal plant in Illinois. The private sector members will contribute $400 to $600 million to this. The federal government also awarded $308 million to a CCS project in California (to which the Californian government gave $30 million) and $100 million to a project in North Dakota, which will enable Basin Electric Power Co-operative to retrofit CCS technology to a small coal power station.

Obama, and energy secretary Chu, have tried to get more ambitious proposals through Congress, but have been blocked by the Senate. The Jobs for Main Street Act would expand energy loan programs to include large-scale residential and commercial properties. The American Clean Energy and Security Bill would provide $150 million for nine CHP plants and require utilities to reduce demand by 5% and get 15% of their electricity from renewable sources by 2020. The climate bill would introduce a nationwide cap-and-trade for carbon dioxide

As the Democrats lost their majority in the Senate in the 2010 mid-term election, it is unlikely that there will be a US-wide cap-and-trade scheme any time soon. However, there is a greenhouse gas cap-and-trade scheme operating in part of the US – the Northeast Regional Greenhouse Gas Initiative. Therefore, to get a clear picture of American energy policy, we need to look not just at federal programs, but also at what state governments are doing.

State energy policies

Almost half the states offer public funds for energy efficiency and renewables. The grants vary in amount from as little as $500 up to $1 million or more. The ten states doing the most to implement energy efficiency are:

• California.
• Massachusetts.
• Connecticut.
• Oregon.
• New York.
• Vermont.
• Washington State.
• Minnesota.
• Rhode Island.
• Maine.

(See American Council for an Energy Efficient Economy, The 2009 State Energy Efficiency Scorecard).

In addition, since the 1970s, California has required utilities to spend a share of their revenues on reducing energy demand.

States regularly update baseline building codes and construction standards. For example, California has strong mandatory guidelines for construction methods, materials, equipment and controls that are used in new construction and major retrofits.

Idaho, Washington State and Oregon get more than half their electricity from renewables. However, most of this is large hydro. Without hydro, Maine is the clear leader, getting almost a quarter of its electricity from renewables. California gets over 10%, and Vermont, Minnesota, Iowa and Hawaii over 5%. Texas and Florida get around 2%.

Texas has the greatest installed wind capacity, however, at over 7Gw (roughly equivalent to seven medium-sized coal power station). Iowa (2.7Gw) and California (2.5Gw) come second and third on wind.

California has the largest concentrated solar power (CSP) plant in the world at 354Mw with a 500Mw one under construction. CSP generates electricity by using mirrors to reflect sunlight onto water, which then becomes steam and turns turbines. There are also proposed CSP projects in Florida, Arizona and New Mexico.

Missouri promotes the use of ground source heat pumps in schools. These draw heat from the earth and reduce both costs and emissions. Over 2,000 schools in Missouri have such pumps.

State governments use the whole range of policy instruments to promote renewables:

• 26 states have Renewable Portfolio Standards – mandatory percentages of electricity sold that must be renewably generated – although the definition of renewable differs from state to state. This policy is aimed at promoting large renewable installations.
• 44 states and the District of Columbia have net-metering policies, which require electricity grid operators to take renewable electricity and to pay the generator for the electricity. So, net-metering is similar to the feed-in tariff, except that the rate offered for ‘green electricity’ is the same as the rate which the consumer would be charged for ‘brown electricity, whereas in Germany the rate for renewable electricity is much higher than the rate for fossil fuel or nuclear electricity. Net-metering is intended to encourage small renewable installations, such as solar PV, and operate alongside the Renewable Portfolio Standard for larger installations.
• Some states have a feed-in tariff: California, Vermont and Washington State. Maine considered introducing one but the bill was voted down.
• 23 states provide a corporate tax incentive to promote renewable energy development.
• 23 states have policies requiring generation energy providers to disclose the fuel mix of electricity provided.
• 20 provide a personal tax incentive to promote renewable energy development.
• 25 states provide a property tax incentive to promote renewable energy development, as of June 2008.
• 15 states and the District of Columbia have a general Public Benefit Fund in which the state sets a charge for customers and spends the revenue on renewable energy and/or energy efficiency projects.
• Many states use public procurement money to promote renewables, requiring that a specific percentage of electricity used by state government buildings and other facilities is generated from renewable energy sources.

Some states have used their regulatory powers to limit pollution from fossil fuel plants. In 2007, California adopted an Emissions Performance Standard requiring any new coal power station (or existing one being substantially renovated to have carbon emissions no greater than a gas plant would have.

Washington State has followed California’s lead. Massachusetts and New Hampshire have policies that require emissions reductions from existing plants, but this can be met by ‘offsetting’ (investing in emissions reduction programs elsewhere). Oregon had such a policy, but, in 2009, converted it into an Emissions Performance Standard.